The South Africa economy is ruled by diversity. There are well-developed regions around the major industrial hubs and less-developed laid-back regions with slow economic growth. South Africa's metropolitan cities with modern infrastructure and well developed facilities stand in stark contrast with the sprawling townships on the cities' outskirts. When away from the South African economic centres or the usual tourist routes, you quickly will realise that South Africa is still a developing county, albeit with an enormous growth potential.
Cape Town harbour offers the biggest container port facilities in the Southern Hemisphere and a new terminal for ocean cruise liners is in the planning phase. Cape Town and Johannesburg and to a lesser extent Durban are the main economic centers in South Africa and the provinces Gauteng, Western Cape and KwaZulu-Natal contribute over 60% to the country's GDP.
South Africa shares borders with Namibia, Botswana, Zimbabwe, Mozambique, Lesotho and Swaziland and acts as a safe and reliable transport hub with its major airports and seaports on the Southern African continent. South Africa is part of the BRICS nations (with Brazil, Russia, India and China) and belongs to the world's emerging markets.
The Gauteng province, with the provincial capital Johannesburg, and the Western Cape province, with the provincial capital Cape Town, are the most prosperous regions in South Africa and so many businesses prefer opening offices there to have easy access to the Southern African markets. Proximity to good transport networks and access to a well educated work force offer many opportunities for investors looking for excellent business potential in the Southern African region.
South Africa's biggest trade partners in 2015 are:
Imports: China, Germany, Saudi Arabia, USA, Nigeria, India
Exports: China, USA, Japan, Botswana, Germany, Namibia, India
With high unemployment rates and insecurities in the commodities sector, the growth rates in most economies around the world are marginal. China especially registers an economic slowdown and less growth than anticipated is expected there; this impacts the South African economy as well. Although the South African financial system is rated as one of the more stable financial systems worldwide, the credit rating by Moody's has been lowered, in 2016 it still ranks Baa2, which is the second lowest investment grade does not install as much confidence into the ailing economy.
South Africa experiences a skills shortage in many employment sectors which impacts the development of the South Africa economy. The high average unemployment figures of over 26% (and a youth unemployment rate of about 50%), also are to consider and development of the education and training sector is considered as crucial. The energy sector is experiencing some strain and the limited output affects all business areas. However, with the development of new plants and alternative energy resources, such as harvesting concentrated solar power in the Northern Cape, the energy sector is expected to recover over the coming years. The economic growth is anticipated to range in the region of 1% for the year and through various measures the inflation rate is expected to be kept in control however, it is above the recommended 3 - 6% range.
The recurring strikes in the public sector and the student unrest and upcoming municipal elections this August, as well as the ailing energy sector are considered the main influences which dampen the growth potential for this year. However, as the leading emerging market destinations in Africa, with Nigeria, the country will remain the major economic driver in Southern Africa and will remain the favourite destination for investment in the region.
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